Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Benefit Requirements) Rules providing for matters required or permitted by Part 3-3 of the Act, or necessary or convenient to be provided in order to carry out or give effect to Part 3-3 of the Act.

Purpose

The purpose of the Private Health Insurance (Benefit Requirements) Amendment Rules 2018 (No. 6) (the Amendment Rules) is to amend the Private Health Insurance (Benefit Requirements) Rules 2011 (the Principal Rules) as a consequence of amendments implemented by specified instruments, including those made under the Health Insurance Act 1973 as discussed below.

The Amendment Rules also amend Schedule 3 of the Principal Rules by adding two new MBS item numbers (72814 and 73344). These two items were included in the following Determinations which, respectively, took effect from 1 November 2018 and will take effect from 1 January 2019:

These Amendment Rules are the first opportunity to add MBS item 72814 to the Principal Rules as the relevant Section 3C Determination was made after the Private Health Insurance (Benefit Requirements) Amendment Rules 2018 (No. 5) was registered on the Federal Register of Legislation.

The Amendment Rules also amend to Schedule 5 of the Principal Rules to update the reference to the new Second Tier Advisory Committee (the Committee) approved list of facilities that are eligible for second-tier default benefits. This will ensure that it becomes the effective list on 1 January 2019 under the transitional arrangements in the Private Health Insurance (Reforms) Amendment Rules 2018.

Details of the Amendment Rules are set out in the Attachment.

Background

The Principal Rules provide for the minimum benefit requirements for psychiatric, rehabilitation and palliative care and other hospital treatment. Schedules 1 to 5 of the Principal Rules set out the minimum levels of benefit which are payable for hospital treatment. Namely, benefits for overnight accommodation (Schedules 1 and 2), same day accommodation (Schedule 3), nursing-home type patients (NHTP) (Schedule 4) and second tier default benefits (Schedule 5).

The minimum benefits payable per night for hospital treatment provided to NHTPs in Schedule 4 of the Principal Rules is subject to review and change twice annually, to reflect the indexation applied to the Adult Pension Basic Rate and Maximum Daily Rate of Rental Assistance.

Schedule 5 of the Principal Rules requires a health insurer to pay second tier default benefits for most episodes of hospital treatment provided in private hospital facilities that are specified in Schedule 5 if the health insurer does not have a negotiated agreement with the hospital. Schedule 5 sets a higher minimum level of benefit (for overnight treatment and day only treatment provided in specified facilities) than the minimum benefit set for such treatment by Schedules 1, 2 and 3 of the Principal Rules.

Consultation

No consultation was specifically undertaken for the purpose of making the Amendment Rules because the amendments are largely administrative in nature. The Amendment Rules implement changes to reflect updates made to the MBS by the instruments outlined in the Purpose section.

The above instruments listed in the Purpose section implement decisions agreed by Government following recommendations of the Medical Services Advisory Committee (MSAC). The changes in the determinations were released for public comment prior to finalisation of the recommendations to Government as below.

As part of the MSAC process, consultation was undertaken with professional bodies, consumer groups, the public and clinical experts for applications put forward for consideration by the Committee.

The Department notified the private health insurance sector about these MBS item changes prior to the implementation date of 1 January 2019.

The Department received advice from the insurance industry regarding redundant MBS items in the Principal Rules. After a review of the Principal Rules, 30 MBS item numbers have been removed as they are no longer listed on the MBS.

The Amendment Rules commence on the day after registration.

The Amendment Rules are a legislative instrument for the purposes of the Legislation Act 2003.

Items 27 to 29 omit one MBS item (73330) from and insert two new MBS items (72814, 73344) to paragraphs under the heading “Category 6 – Pathology services” of clause 8 of Schedule 1 to the Principal Rules.

Item 30 amends the Principal Rules by updating the reference to the latest Second Tier Advisory Committee-approved list. The list of facilities eligible for second tier default benefits is the list existing at the time of this amendment and is published on the Department of Health’s website at http://www.health.gov.au/internet/main/publishing.nsf/content/health-privatehealth-providers-circulars.htm.